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Revenue bonds a business decision

An action by the Kenai Peninsula Borough Assembly to approve the sale of revenue bonds to finance the expansion of Central Peninsula Hospital has attracted a great deal of attention this week.

Criticism of the assembly action appears to be a tempest in a teapot, whipped up by misconceptions of what exactly the assembly was agreeing to do. The body gave the borough administration the go-ahead to issue $43 million in revenue bonds for the expansion project. Revenue bonds would seem to be a good option for the project as they will be paid off through hospital revenues, rather than with taxpayer dollars. Those upset that voters won’t get to weigh in on the issue seem to be missing the point that borough taxpayers won’t be footing the bill.

The other part of the criticism revolves around just how much say the public should have in managing a public asset.

This is not a new debate for the borough. Just three years ago, the assembly declined to even discuss the joint venture with a private, for-profit entity. One of the goals of such a partnership would have been to finance the type of hospital growth currently under way. Hospital administrators see that growth as essential to maintaining a competitive, state-of-the-art facility that addresses the needs of central Kenai Peninsula residents.

However, the assembly, with no small amount of public input, has determined that the public maintain ownership of the hospital, as well as a strong interest in managing the facility.

It’s where those two things come into conflict — a competitive business model vs. public oversight — that seems to be the crux of current concerns. Though it is a government body that oversees a public asset, the assembly made a business decision when it OK’d revenue bonds to fund hospital expansion.

Government bodies frequently are encouraged to act more like the private sector, and in this case, that’s exactly what the assembly did.